(Business 2.0) – Silicon Valley guards its corporate secrets the way a mother grizzly guards her cubs. And when it comes to keeping a lid on information, Steve Jobs is the fiercest bear around. When Jobs returned to Apple in 1997, he was appalled by the leaks gushing from the company. He tasked Robin Zonic, a former parole officer who works in Apple's security department, to help create a security apparatus that Apple insiders say now rivals a spy agency's. Among the things she typically tells new employees, insiders say, is "If you leak, we will find you, we will fire you, we will sue you, and we will prosecute you."

They mean it. Apple has sued several suspected leakers or their abettors. Jobs also compartmentalized the company so that the vast majority of employees, even most managers, don't know what their colleagues are working on. Each product has several code names--a different one in each department. "Teams doing components have no idea what product they're for," says an Apple engineer. Jobs, former execs say, also has been known to plant false rumors internally; if they leak, he knows who talked.

For Jobs, secrecy is about more than just throwing rivals off the scent. The cone of silence creates valuable speculation and buzz about his next move. "He knows the power of a secret," says Clent Richardson, formerly an Apple exec and now Nortel's chief marketing officer.

Beyond that, leaks ruin what Jobs may be best at: sales as performance art. He's the master of the grand unveiling, and not just before the throngs at Macworld. A case in point: In 1998 he and a handful of his sales reps went to woo a major university. Jobs was toting a bowling-ball bag. He plopped it down and launched into a tirade--against Apple. "This company is screwed!" he railed, someone who was there recalls. "But we're going to fix it." Then he ordered his sales reps out of the room, reached into his bowling bag, and, like a magician pulling a rabbit out of a hat, presented the iMac, the curvy computer that put Apple back on the trendy product map.

Now it can be told: His audience had never seen anything like it. He sealed the deal. -- PAUL KAIHLA AND PAUL SLOAN